In a June 9 research note, ROTH Capital Partners analyst Joe Reagor reported that a recent scoping study of Piedmont Lithium Ltd.'s (PLL:NASDAQ; PLL:ASX) lithium project in North Carolina showed a substantially higher net present value (NPV) than previously estimated.
"We see this as a positive update," Reagor commented.
The Piedmont project's new after-tax NPV is $1.9 billion, Reagor relayed. This reflects a boost of $852 million over the same figure calculated in the 2020 scoping study. Of the $852 million increase, higher forecasted lithium prices account for $376 million whereas improved operational specifics, such as greater throughput, drive the remainder, which Reagor described as "encouraging."
ROTH's model now reflects higher estimated metals prices, $15,000 per ton for lithium hydroxide and $775 per ton for lithium concentrate, Reagor wrote. Throughput is higher. Assumed capex is higher, and to fund it, a $300 million equity financing at $69 per share is now included in its model. Also, the estimated start date of operations is about a year later. "We note this is just an assumption for modeling purposes and the timing and structure of future financings is likely to differ," Reagor noted.
"While we view this as a positive update, we note that our inclusion of added future dilution essentially offset the improved project economics," the analyst wrote. ROTH is maintaining its Buy rating and $81 per share price target on Piedmont Lithium. Its current share price is about $69.72.
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Disclosures from ROTH Capital Partners, Piedmont Lithium Ltd., Company Note, June 9, 2021
Regulation Analyst Certification ("Reg AC"): The research analyst primarily responsible for the content of this report certifies the following under Reg AC: I hereby certify that all views expressed in this report accurately reflect my personal views about the subject company or companies and its or their securities. I also certify that no part of my compensation was, is or will be, directly or indirectly, related to the specific recommendations or views expressed in this report.
Within the last twelve months, ROTH has received compensation for investment banking services from Piedmont Lithium
Limited.
ROTH makes a market in shares of Piedmont Lithium Limited and as such, buys and sells from customers on a principal
basis.
Within the last twelve months, ROTH has managed or co-managed a public offering for Piedmont Lithium Limited.
ROTH Capital Partners, LLC expects to receive or intends to seek compensation for investment banking or other business relationships with the covered companies mentioned in this report in the next three months.
